SECTION 4. APPLICATION

.01 Eligible small businesses that have not filed a return for the applicable 2008 NOL taxable year .

(1) A taxpayer within the scope of this revenue procedure that has not filed a return for the taxable year in which the applicable 2008 NOL arises makes the election under § 172(b)(1)(H) by attaching a statement to the taxpayer’s federal income tax return for the taxable year in which the applicable 2008 NOL arises. The statement must—

(a) Clearly state that the taxpayer is electing to apply §172(b)(1)(H);

(b) Describe the length of the NOL carryback period elected by the taxpayer (3, 4, or 5 years); and (c) If applicable, state that the taxpayer is electing to apply § 172(b)(1)(H) to the taxpayer’s taxable year that begins in 2008. (2) The taxpayer’s return must be filed by the due date (including extensions of time) for filing the taxpayer’s return for the taxable year of the applicable 2008 NOL. In the case of a late election, relief may be available under § 301.9100–2(b) of the Procedure and Administration Regulations. Notwithstanding this due date, an election to apply § 172(b)(1)(H) to an applicable 2008 NOL for a taxable year ending before February 17, 2009, will be treated as timely if the election is filed on or before April 17, 2009.

.02 Eligible small businesses that have filed a return for the applicable 2008 NOL

taxable year and did not elect to forgo the NOL carryback period.

(1) A taxpayer within the scope of this revenue procedure that previously filed a return for the applicable 2008 NOL taxable year and did not elect to forgo the NOL carryback period under § 172(b)(3) makes the election under § 172(b)(1)(H) as follows:

(a) What to file. (i) The taxpayer must file the appropriate form including a statement of the carryback period the taxpayer elects (3, 4, or 5 years). The appropriate form is— (A) For corporations, Form 1139, Cor- poration Application for Tentative Refund, or Form 1120X, Amended U.S. Corpora- tion Income Tax Return ;

(B) For individuals, Form 1045, Ap- plication for Tentative Refund, or Form 1040X, Amended U.S. Individual Income Tax Return ; and

(C) For estates or trusts, Form 1045, or amended Form 1041, U.S. Income Tax Return for Estates and Trusts .

(ii) A taxpayer that makes the election by filing an amended return must file the return for the earliest taxable year to which the taxpayer is carrying back the applicable 2008 NOL. The taxpayer should not file an amended return for the applicable 2008 NOL taxable year. (b) Labels . The taxpayer should type or print across the top of the appropriate form “2008 NOL Carryback Election Pursuant to Rev. Proc. 2009–19.” If the taxpayer previously filed an application for a tentative carryback adjustment or an amended return applying an NOL carryback period that did not qualify for the election under § 172(b)(1)(H), the taxpayer also should type or print across the top of the appropriate form “Amended NOL Carryback Election Pursuant to Rev. Proc. 2009–19.” In addition to the labels listed above, a taxpayer that elects pursuant to § 172(b)(1)(H)(ii)(II) to treat its NOL arising in a taxable year beginning in 2008 as the applicable 2008 NOL, must include a statement that the taxpayer is electing to apply § 172(b)(1)(H) to a taxable year that begins in 2008.

(c) When to file . The taxpayer must file the appropriate form by the later of the date that is 6 months after the due date (excluding extensions) for filing the taxpayer’s return for the taxable year of the applicable 2008 NOL, or on or before April 17, 2009.

April 6, 2009 748 2009–14 I.R.B.

ments that have been discovered to be fraudulent, resulting in significant losses to taxpayers. These arrangements often take the form of so-called “Ponzi” schemes, in which the party perpetrating the fraud receives cash or property from investors, purports to earn income for the investors, and reports to the investors income amounts that are wholly or partially fictitious. Payments, if any, of purported income or principal to investors are made from cash or property that other investors invested in the fraudulent arrangement. The party perpetrating the fraud criminally appropriates some or all of the investors’ cash or property.

.02 Rev. Rul. 2009–9, 2009–14 I.R.B. 735 (April 6, 2009), describes the proper income tax treatment for losses resulting from these Ponzi schemes.

.03 The Service and Treasury Department recognize that whether and when investors meet the requirements for claiming a theft loss for an investment in a Ponzi scheme are highly factual determinations that often cannot be made by taxpayers with certainty in the year the loss is discovered.

.04 In view of the number of investment arrangements recently discovered to be fraudulent and the extent of the potential losses, this revenue procedure provides an optional safe harbor under which qualified investors (as defined in § 4.03 of this revenue procedure) may treat a loss as a theft loss deduction when certain conditions are met. This treatment provides qualified investors with a uniform manner for determining their theft losses. In addition, this treatment avoids potentially difficult problems of proof in determining how much income reported in prior years was fictitious or a return of capital, and alleviates compliance and administrative burdens on both taxpayers and the Service.